What’s GDP got to do with it ?!?

In my previous two mailouts I have explored ‘Why do we innovate’ and ‘What’s the purpose of innovation’. My conclusion on the purpose of innovation was that, despite the fact that much of the innovation that emerges has the potential to do more harm than good, fundamentally we innovate because we want to improve things. From a somewhat more existential perspective: we want to create a better future for our children. If creating a better future for our children is what we are after, how do we know how we are doing with it?

As Tom Peters put it so succinctly, what gets measured gets done. In order to determine whether we as human race are improving and indeed creating a better future for our children, we are focusing on growth of GDP (Gross Domestic Product). While what gets measured gets done, you also get what you measure (and often only that…).

When the measure was adopted it was felt that it would be a good indicator for the improvement of standards of living, which in turn, so could be argued, is supposed to reflect people’s wellbeing – and that’s been the dominant logic ever since!

But does more ‘stuff’ make for a better life? People have been asking this questions for a while, and not just any, but some pretty powerful ones: in a famous speech in 1968 Robert F. Kennedy stated that, “GDP is not measuring that which makes life worthwhile.” In 1972 the then king of Bhutan, Jigme Singye Wangchuck, said “Gross National Happiness is more important than Gross National Product.”

A 2007 paper by the European Parliament stated that: “GDP does not properly account for social and environmental costs and benefits. It is also difficult to achieve sustainable decision-making aiming at sustainable progress and wellbeing if welfare is being considered from a purely financial point of view.” Former British Prime Minister David Cameron commented in 2006 that “…there is more to life than making money” and argued that “improving people’s happiness is a key challenge for politicians” – which is why he promoted replacing GDP with measuring GWB (general wellbeing). Having lived in the UK since 1990 I cannot say that I have noticed any emphasis on improving wellbeing, and which is why I find it much more remarkable that the Prime Minister of a different country is using action rather than words: Jacinda Ardern has unveiled a new approach to running New Zealand’s finances that includes a budget dedicated to improving wellbeing. By the way, this was highlighted as one of the top stories from the 2019 World Economic Forum in Davos. As they say, actions speak louder than words …

It is also worth emphasising that GDP ignores two sign significant, no, critical factors: environmental and social costs. As Herman Daly, author of ‘Beyond Growth [the economics of sustainable development] pointed out in 1996, “The concepts ‘growth’ and ‘development’ are not necessarily the same.” Funnily enough, we talk about developing and developed countries, not about growing and grown up countries… Daly also stated that “Uneconomic growth occurs when increases in production come at an expense in resources and well-being that is worth more than the items made.” George Monboit, British writer known for his environmental and political activism, also makes this argument passionately and convincingly in this short video. Bottom line:

Growth as currently pursued seems to achieve the opposite of what it is meant to do: it undermines people’s happiness and wellbeing.

To substantiate this statement we need to answer the question: What drivers people’s happiness and wellbeing?

Of course, that also leads to the question: what alternatives or supplements to GDP do we have? … which is what I’ll do in the next mailout.

Let’s start with a definition of wellbeing at the individual level: “Well-being is the experience of health, happiness, and prosperity. It includes having good mental health, high life satisfaction, and a sense of meaning or purpose.” Broadening the view, the UK Office for National Statistics defines wellbeing as, “How we are doing’ as individuals, communities and as a nation and how sustainable this is for the future.” Based on a national debate, they have identified 10 broad dimensions which seem to matter most; interestingly, they are quite similar to the dimension of the Bhutanese Happiness Index, even though the contexts might be considered very different.

The UK’s dimensions of wellbeing (2011)

Bhutan’s components of GNH (2010)

33 indicators are distributed across these 9 areas

1. The natural environment

1. Psychological Wellbeing (Psychological indicators)

2. Personal well-being

2. Mental and Spiritual Health (Health and mental health indicators)

3. Our relationships

3. Time-balance (Work and Sleep Indicators)

4. Health

4. Social and Community Vitality (Philanthropy, Family related indicators)

5. What we do

5. Cultural Vitality (Native speaker, Domestic industry indicators)

6. Where we live

6. Education (Literacy indicators)

7. Personal finance

7. Standard of life (Living Standards indicators)

8. The economy

8. Good governance (Human rights, political participation, government performance indicators)

As I am a true believe in the power and importance to connecting with the natural world, I am particularly pleased to see ‘the natural environment’ as number one on the UK’s list – and feel this is a good place to share a lovely story, Paul Beckett, long standing member of the ILF Wider Community, shared with me a little while ago.

“I swim in the sea daily, it connects me to the strength and conviction of the elements and reaffirms my own fragility. As populations condense further into urban areas that connection is being lost to our detriment.

Society collectively can act sociopathicaly, nowhere is this more poignant than the neon glowing conurbation, where constructed environments dominate natural ones, where the ability to deny the nature of causality is most widespread.

The irony is that some of the most ‘supposedly’ sophisticated population hubs (cities) lay close to the tides’ touch, and the architects of our futures, who need reminding of their impact upon nature, huddle ever tighter together, blinkered by the view of towers and construction, whispering to themselves, blinded by the glare of the emperors new clothes.

As the global waters rise, the impact of any endeavour should be measured by the three P’s you describe: profit, people, planet. And very importantly, the meaning of profit cannot only be financial.”

I agree and sometimes wonder whether there is a rather great difference between what we believe makes us happy, and what actually makes us happy…

This reminds me of a study undertaken in 1946 by the the Labor Relations Institute of New York that ranked what employees want and what managers think their employees want. While this seems a rather long time ago, over the years repeat studies have revealed very similar results. Below how employees and managers ranked the top 10 criteria:

Employees are looking for …

What manager believe they want …

1. Full appreciation for work done

1. Good wages

2. Feeling “in” on things

2. Job security

3. Sympathetic help on personal problems

3. Promotion/growth opportunities

4. Job security

4. Good working conditions

5. Good wages

5. Interesting work

6. Interesting work

6. Personal loyalty to workers

7. Promotion/growth opportunities

7. Tactful discipline

8. Personal loyalty to workers

8. Full appreciation for work done

9. Good working conditions

9. Sympathetic help with personal problems

10. Tactful discipline

10. Feeling “in” on things

Even in times of financial crises it is not money that motivates. McKinsey reported in 2009 that non-financial incentives are rated to be better motivators than financial incentives – but are less frequently used (see below). Not surprising if the above still holds true…

Should you be interested in some more myths about motivation, check out this article in the Financial Post.

I wonder whether, despite evidence to the contrary, we have bought too much, and at too deep a level, into the idea that stuff makes us happy. When I am saying ‘too deep’ I mean that this belief is something so deeply embedded in our thinking that we are no longer aware that it is just an assumption, and it also means that we are not really questioning it – or at least not enough.

I further wonder whether the things that give us the illusion of independence and self-sufficiency – our own transport, our own space, our own ‘machinery’, and all the technology that is supposed to connect us, makes us more lonely and disconnected than we have ever been… Again there is evidence to support this: a recent survey of 20,096 Americans found that nearly half feel alone, isolated or left out at least some of the time. The group worst affected are young people between 18 and 22 years – arguably the ones most ‘connected’ on social media (though according to the survey there does not seem to be much difference between social media users and non-users). This is not only an American problem. When British Prime Minister Theresa May instituted a ‘Minister for Loneliness’ in January 2019 in order to address the problem of nine million Brits feeling often or always lonely, the newly instituted minister immediately triggered interest from Canada, UEA, Sweden, Japan, Iceland, Germany and New Zealand.

According to a study that underlies Shawn Achor’s book ‘The Happiness Advantage’, the one thing – the only thing – that set the happiest 10 percent apart from the rest: the strength of their social relationships. An empirical study on well-being among 1,600 Harvard undergraduates by Eric Barker, contributor to Time, found similar results: social support was a far greater predictor of happiness than any other factor, more than GPA, family income, SAT scores, age, gender, or race – with a correlation between social support and happiness of 0.7. As Eric points out,: “This may not sound like a big number, but for researchers it’s huge—most psychology findings are considered significant when they hit 0.3. The point is, the more social support you have, the happier you are. So John Cusack seems to be right to insist on face to face meetings.

Relationships are key to happiness, yet perhaps not quite sufficient to achieve overall wellbeing. Whether we look at the 10 aspects used to evaluate wellbeing in the UK, of Bhutan’s GNH indicators, they represent a systemic approach that encompasses physical, psychological, emotional and spiritual wellbeing.

In the business context wellbeing is defined slightly differently. In a 2017 report Gallup identifies five elements that drive wellbeing in the workplace context:

purpose

social wellbeing

financial wellbeing

community, and

physical wellbeing.

If employees experience wellbeing in all of these five areas, they tend to miss less work, achieve higher customer ratings, problems are addressed more readily, and they adapt to change more quickly. Given our fast-paced context the latter alone should motivate companies to pay attention! And as the ‘war for talent’ remains an issue, the fact that these employees are 81% less likely to look for a new job in the next 12 months period is also hugely important.

No surprise then that we can read in a Deloitte report from 2018 that “Many major organisations are rethinking their reward and development programs to include some version of holistic, end-to-end well-being programs, which are now both a responsibility of good corporate citizenship and a key element of an enterprise talent strategy.”

Indeed, companies are not only thinking about it, some of them have been acting already. I am delighted to share the following piece by other long standing member of the ILF Wider Community, Joanne McCormick, until recently Director of Strategic Projects at Penguin Random House UK who have had a strong commitment to wellbeing (she has just started her own company, The Healthy Head Company, which you can also find on Facebook).

Why Companies Ought to Consider the Wellbeing of Their Employees More

As the lines between work and personal life continue to blur and as our awareness increases on the impact that this has on employee wellbeing, it will become increasingly difficult for organisations to turn away from their responsibility in supporting this wellbeing, especially if they want to continue to deliver sustainable growth and change.

We used to talk about change as if it was something that happened occasionally and that we managed change as a project. In some cases, this is still true when the change is significant and complex, but change is now a constant and there is an expectation that we can all keep up with and deal with its impacts. This is one of many reasons why it is so important to support employee wellbeing.

Employees are a company’s biggest investment and their greatest asset, but more importantly they are human beings and should not been seen simply as a resource. If you think of employees as the nerve centre at the heart of any organisation then it follows that organisations need to take some of the responsibility in ensuring that employees physical and mental health is in good shape so that they can continue to contribute to the organisation’s success.

Many organisations have been aware of the need to look after employee wellbeing and have been running programmes and offering benefit packages for years but, there is a growing need to take a more holistic approach which looks not only at physical health and wellbeing but also mental health.

We all have mental health, just as we have physical health and there is a growing conversation about mental health which shows us that people experiencing poor mental health is more common than we thought and, the more we talk about this the more we will see that it has and will affect many of us in one way or another during our lives.

According to a report published by the Health and Safety Executive in October 2018 “work-related stress, depression or anxiety continues to represent a significant ill health condition in the workforce of Great Britain. Work-related stress, depression or anxiety accounts for 44% of work-related ill health and 57% of working days lost, in 2017/18…The reasons cited as causes of work-related stress involve workload, lack of managerial support and organisational change as the primary causative factors.”

It is easy to have wellbeing programmes in place that on the surface seem great but we need to take a closer look at the culture of an organisation to see if it carries this through. Is the organisation placing unreasonable demands and expectations on its staff? Is there an expectation that emails sent late at night will receive a response or is there an expectation that employees should work long hours? On occasion this may be required but if this pace of work and these expectations become the norm then it is not sustainable and employee wellbeing will start to suffer.

There are some stand out organisations who are going the extra mile and on Monsters jobsite they list 7 organisations who offer “epic wellness programmes” including Google where you can learn to cook or play the guitar as part of a Google lesson programme, Asana who have nap rooms where employees get paid for sleeping, allowing them to “rest up, recharge and de-stress” and at Intuit they have a “fit for life” programme where “meditation and mindfulness classes are reimbursable expenses” demonstrating that it’s not just physical health but employee happiness that is important.

There is no time like now to develop some sustainable practices for yourself or perhaps the organisation you work in. We are not machines; we are amazing and complex beings that deserve some self-care and a sustainable work life balance. Think about the advice you would give a good friend if you thought they were working too hard and starting to show some signs of stress, it would likely be kinder and gentler than the conversation you would have with yourself. Makes you think doesn’t it?

So it is no surprise that Deloitte ended their 2018 report as follows: “Wellbeing is becoming a core responsibility of good corporate citizenship and a critical performance strategy to drive employee engagement, organisational energy, and productivity. It is also a growing expectation among the talent companies most want to recruit, access, and retain. No longer an optional or narrowly focused element of the rewards menu, well-being is now front and centre as a business imperative for leading, high-performance companies.”

One final thought from me: We constantly hear an urgent and never ending call for innovation for growth, that we need to innovate to increase GDP. Given that GDP can – or should – be seen as a proxy for an improvement of wellbeing, and given that wellbeing seems to be driven by ‘stuff’ seems to play a limited role in people’s wellbeing – certainly for happiness – should we not rather be talking about innovation to improve people’s wellbeing?